The Guardian has followed up a report from TaxWatch UK in which found Rockstar North, part of Rockstar Games and a subsidiary of Take-Two Interactive, had not paid any corporation tax in the UK.
Further investigation by the newspaper has revealed that Warner Bros, which owns UK studios Rocksteady and Travellers Tales, has claimed £60m in tax relief, with Sony and Sega pocketing £30m and £20m respectively. “Close to half of all the relief went to four large foreign-based companies. Scores of games that have few, if any, apparent British cultural references have been awarded large rebates,” they report.
None of the companies have done anything illegal, they have simply applied for and were given tax breaks as they met certain criteria. Applicants to this fund have to meet a total of 16 points out of 31 to be eligible for tax relief, and you can see the full list of requirements below.
|Section A – Cultural content|
|A1||Set in the UK or an EEA state or (Up to 3 points will be awarded for set in an undetermined location)||Up to 4 Points|
|A2||Lead characters British or EEA citizens or residents (or characters from an undetermined location)||Up to 4 Points|
|A3||Video game based on British subject matter or relates to an EEA state or underlying material||4 points|
|A4||Original dialogue recorded mainly in English language or one of six UK indigenous languages||Up to 4 Points|
|Section B – Cultural contribution|
|B||Video game represents/reflects British creativity, British heritage or diversity||Up to 4 Points|
|Section C – Cultural hubs|
|C1||At least 50% of the conceptual development or storyboarding or programming or design takes place in the UK||2 points|
|C2||At least 50% of the music recording or audio production or voice recording takes place in the UK||1 point|
|Section D – Personnel|
|D1||1 of the 3 lead project leaders is an EEA citizen or resident||1 point|
|D2||1 of the 3 lead scriptwriters is an EEA citizen or resident||1 point|
|D3||1 of the 3 lead composers is an EEA citizen or resident||1 point|
|D4||1 of the 3 lead artists is an EEA citizen or resident||1 point|
|D5||1 of the 3 lead programmers is an EEA citizen or resident||1 point|
|D6||1 of the 3 lead designers is an EEA citizen or resident||1 point|
|D7||At least 1 of the 7 key HoDs is an EEA citizen or resident||1 point|
|D8||At least 50% of the development team are EEA citizens or residents||1 point|
It seems that many games are qualifying for the breaks the development team are are EEA citizens, the game is set in a fictional location, and almost all games have dialogue recording in English.
For example, Rocksteady created Batman: Arkham Knight here in London so all the leads are resident, Gotham is a fictional location, and the dialogue is English. That would score 17 points making one of the most American heroes in existence a British icon who qualifies for tax relief. The problem here is not with Sony, Warner Bros, or Rockstar, it is that the qualification rules are very loose.
The head of UKIE, Jo Twist, said the relief had “played an important role in making the UK one of the best places to make games in the world,” and the scheme was also backed by the British Film Institute.
Statistics released by the government do show there were over 300 claims from smaller developers which were paid out.